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the UNICAP rules as an operation of law.10 We find that argument
unpersuasive. The fact of the matter is that, up until and
including the subject year, petitioner used a method of
accounting that did not reflect the UNICAP rules, and our
holdings herein mean that petitioner must recompute its income
for the subject year under a method of accounting that does take
into account those rules. See also sec. 1.263A-1T(e)(11),
Temporary Income Tax Regs., 52 Fed. Reg. 10052, 10083-10084 (Mar.
30, 1987) (“Taxpayers who are required to change their method of
accounting under this section and who fail to comply with the
requirements of this paragraph (e)(11) [regarding an automatic
10
Petitioner also notes that the Commissioner had previously
examined some of its earlier taxable years that postdated the
effective date of the UNICAP rules and that the Commissioner had
never changed its method of accounting for those years to conform
to those rules. Petitioner suggests that the Commissioner now is
estopped from making the sec. 481 adjustment for the subject
year. We find this suggestion unavailing. The fact that the
Commissioner had the opportunity to, but did not, change an
improper method of accounting in an earlier year does not mean
that he is estopped from making the change in the later year.
See Knight-Ridder Newspapers Inc. v. United States, 743 F.2d 781
(11th Cir. 1984). The doctrine of equitable estoppel does not
bar the Commissioner from correcting a mistake of law, see
Automobile Club v. Commissioner, 353 U.S. 180, 183 (1957); see
also Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 61 (1995),
and the cases cited therein, affd. 140 F.3d 240 (4th Cir. 1998),
"even where a taxpayer may have relied to his detriment on the
Commissioner's mistake", Dixon v. United States, 381 U.S. 68,
72-73 (1965). The Commissioner may correct mistakes of law
because "'Whoever deals with the government does so with notice
that no agent can, by neglect or acquiescence, commit it to an
erroneous interpretation of the law."' Graff v. Commissioner, 74
T.C. 743, 762 (1980) (quoting Schafer v. Helvering, 83 F.2d 317,
320 (D.C. Cir. 1936)), affd. 673 F.2d 784 (5th Cir. 1982).
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